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Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D. C. 20554
In the Matter of )
) File No. EB-00-TC-164
America's Tele-Network Corp. )
)
Apparent Liability for Forfeiture ) NAL/Acct. No.
200132170016
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
AND ORDER
Adopted: March 12, 2001 Released: March 13, 2001
By the Commission:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture
(NAL),1 we find that America's Tele-Network Corporation (ATNC)
apparently willfully or repeatedly violated section 258 of the
Communications Act of 1934, as amended (the Act),2 as well as
Commission rules and orders, by changing the designated preferred
carriers of 16 consumers without their authorization, a practice
commonly know as ``slamming.'' Based upon our review of the
facts and circumstances surrounding the violations, we find ATNC
apparently liable for a forfeiture in the amount of $1,020,000.
2. Last year, the Commission received 263 consumer
complaints against ATNC. Commission staff investigated many of
these allegations, directing ATNC to provide proof that it had
verified the complainants' conversions3 in accordance with the
Commission's rules. Based on the complaints received and the
documents and tapes ATNC has provided, we conclude that ATNC has
apparently violated section 258 of the Act and sections 64.1100
and 64.1150 of the Commission's rules.4 Accordingly, we propose
a fine of $40,000 for each of 17 apparent violations represented
by the 16 consumer complaints listed in Appendix A, for a
forfeiture of $680,000. We further propose increasing the fine
by 50% based upon ATNC's apparent pattern of intentional and
egregious misconduct, for a total proposed forfeiture of
$1,020,000.
II. BACKGROUND
3. ATNC is a nationwide reseller of long distance
telephone services5 and is headquartered in Roswell, Georgia.6
Counsel for ATNC states that the company uses telemarketers to
solicit consumer change request orders7 and then confirms those
authorizations via an automated system8 operated by an
independent third party.9 Apparently, ATNC's telemarketer dials
a toll-free number to connect the consumer to the verifier's
automated voice-response unit (VRU), which records the consumer's
purported verification. Counsel states that ATNC connects the
consumer to the verifier ``right after the telemarketing call to
ensure that the change is voluntary and authorized.''10 The ATNC
telemarketer remains on the line while the consumer responds to
the VRU prompts.11 4. All of the complaints forming the basis of this NAL
contain allegations that ATNC did not verify the purported
authorizations. For illustrative purposes, we profile three
complaints that may shed light on ATNC's marketing and
verification procedures. On May 11, 2000, Amber Baxter filed a
complaint with the Commission, alleging that ATNC switched her
preferred long distance provider from AT&T to ATNC without
authorization.12 In support of that complaint, Ms. Baxter also
filed a declaration, which stated in part:
On April 6, 2000, I received a telephone call from a
telemarketer claiming to be with AT&T. [The
telemarketer] said her name was Kacey Williams and knew
that I had the AT&T 7-cent plan. [Ms. Williams] said
that some customers had been over-billed and that she
was going to send me a $100 check courtesy of AT&T. I
became very suspicious and asked again if she was with
AT&T. [Ms. Williams] confirmed this several times. I
questioned Kacey why AT&T wouldn't credit my phone
bill. She said that this was the reason for the call.
She said that they had to `simply' confirm my name and
address with a third party verifier in order to send
the check. I answered the verifier by saying ``yes''
to name and address, then confirmed by giving my
birthda[te]. The third party verifier was a recording.
At no time did I give ATNC permission, verbal or
otherwise, to change my long distance service. I hung
up and immediately called AT&T. The AT&T
representative informed me that they were not mailing
out any such checks.
When I received my May telephone bill, I realized that
my long distance service had been changed to ATNC
without my permission. . . . On May 12, 2000, I called
ATNC and spoke with Desiree Jones. She insisted that I
had knowledge of the switch . . . because I had talked
with a third party verifier. Ms. Jones also denied
that ATNC had misrepresented themselves as AT&T. I
told Ms. Jones that
I was going to file a complaint. She responded `fine,
we have a recording where you agree to be switched.'13
5. On September 12, 2000, Jose Valcarcel filed a complaint
with the Commission alleging that ATNC had converted his long
distance carrier from AT&T to ATNC. In support of the complaint,
Mr. Valcarcel subsequently filed a declaration, in which he
states that an ATN telemarketer called him on June 28, 2000,
offering to switch his long distance telephone account from AT&T
to ATNC in exchange for $100.14 Mr. Valcarcel states he declined
the offer. On August 4, 2000, however, he received a telephone
bill from ATNC for $285.37. Upon learning of the conversion, Mr.
Valcarcel contacted ATNC to advise them that he had not
authorized the change.15 According to Mr. Valcarcel, ATNC stated
that he had authorized the switch, and they played a recording of
his conversation with a telemarketer. While Mr. Valcarcel
concedes that he ``had answered `yes' to a few questions'' (i.e.
his date of birth and whether he was a legal resident of Key
Largo), he avers that he did not authorize ATNC to change his
long distance provider.16
6. On November 8, 2000, David Womack filed a complaint
with the Commission alleging that ATNC had changed his preferred
long distance provider not once, but twice, during the fall of
2000. In support of his complaint, Mr. Womack filed a
declaration with the Commission on February 26, 2001, in which he
describes the circumstances surrounding the two conversions.17
Mr. Womack states that he first learned of the initial conversion
sometime in late September 2000, when his preferred long distance
carrier, MCI, called to find out why he had changed carriers.
Mr. Womack states that he didn't recall speaking with any ATNC
telemarketers and was thus unaware that his designated long
distance carrier had been changed. After speaking with MCI about
this unauthorized conversion, Mr. Womack directed his local
carrier, Verizon, to change his service back to MCI.18 Mr.
Womack eventually received an invoice from ATNC but, despite
numerous attempts to contact the carrier, never reached anyone.
This scenario recurred at the beginning of November, when Mr.
Womack received another call from MCI asking why he had changed
carriers. Mr. Womack again contacted Verizon, who restored MCI
as his preferred carrier on November 8, 2000.19
7. Based on the facts alleged in these and the other 13
complaints at issue, staff
forwarded to ATNC the names and phone numbers of the
complainants20 and directed ATNC to provide sworn, written
responses to general inquiries regarding ATNC's marketing and
verification procedures and to provide specific evidence
pertaining to the disputed verifications. In response, ATNC
provided a copy of its verification script and 13 audio tape
recordings representing ``the entire recorded conversation
between the telemarketing agent and the consumer.''21 (ATNC
states that it is unable to forward the verification tape for Mr.
Womack22 and that the tapes for Ms. Ayersmann and Ms.Park were
damaged. 23) ATNC also described two promotions it had offered
during the relevant time period and provided a copy of the
marketing script its telemarketers had used.24 One promotion
offered consumers ``a $100 check for those persons who became an
ATN customer and utilized ATN's services for a period of at least
180 days.''25 The other promotion offered a calling card with
100 free minutes of usage, which was enclosed in ATNC's welcome
package.26
III. DISCUSSION
8. Section 258 of the Act makes it unlawful for any
telecommunications carrier to "submit or execute a change in a
subscriber's selection of a provider of telephone exchange
service or telephone toll service except in accordance with such
procedures as the Commission shall prescribe."27 The rules the
Commission adopted prescribe that no carrier ``shall submit a
change on the behalf of a subscriber . . . prior to obtaining:
(i) Authorization from the subscriber and (ii) Verification of
that authorization in accordance with the procedures prescribed
in § 64.1150.''28 The Commission's rules thus expressly bar
telecommunications providers from changing a consumer's preferred
carrier without first obtaining the consumer's consent, and then
confirming that consent.
9. The Commission's rules provide some latitude in the
methods carriers can use to obtain consumer authorizations and
verifications of carrier change requests. For example, a carrier
may elect to use telemarketing representatives or direct face-to-
face contact to solicit consumer authorizations for carrier-
change requests. The carrier can then elect to verify that
authorization through one of three options, including the use of
an independent third party. There is no latitude, however, in
the requirement that carriers obtain both authorization and
verification prior to submitting a carrier change request. Thus,
for those carriers who use an independent third party to verify
the consumer's authorization, our rules require that ``[t]he
content of the verification . . . include clear and conspicuous
confirmation that the subscriber has authorized a preferred
carrier change.''29 The rules are similarly clear that:
[w]here a carrier is selling more than one type of
telecommunications service [e.g., local exchange service,
regional toll, or interstate long distance], . . . that
carrier must obtain separate authorization from the
subscriber for each service sold, although the
authorizations may be made within the same solicitation.
Each authorization must be verified separately from any
other authorizations obtained in the same solicitation . . .
in accordance the verification procedures prescribed.''30
Carriers must also ``maintain and preserve records of
verification of subscriber authorization for a minimum period of
two years after obtaining such verification.''31
10. All of the consumers who filed the complaints that form
the basis of this NAL state unequivocally that they did not
authorize ATNC to change their designated, preferred long
distance providers.32 ATNC does not dispute that it changed the
complainants' preferred carrier selections. ATNC does, however,
contend that the complainants authorized the change requests and
that ATNC verified the authorizations. Specifically, ATNC
asserts that its verification procedures comply with our rules
because they produce ``clear and conspicuous confirmation'' that
the consumer has authorized a carrier change. As discussed
below, we disagree.
A. Verification Script
11. Counsel for ATNC confirm that the following
verification script33 was the only script used during the period
January 1, 2000 through October 7, 2000, the date ATNC states it
voluntarily stopped marketing its services.34 The script is
published in its entirety [for clarity, we have numbered each
clause]:
Customer Rep Dials FCG's 800#
Rep Enters 5 digit Room & Rep #
Bring customer online, then press ``1'' to begin
verification.
[1.] Automated message: Thank you for choosing
America's Tele-Network as your long distance and local
provider. In addition to the $100.00 check awarded
once you have been online for 180 days, you have been
selected to receive a free bonus gift . . . a 100
minute pre-paid calling card! Please answer the
following questions. When finished with each of your
responses, press one to continue or nine to re-record.
[2.] At the tone, please say your name and address
clearly. Spell your name if necessary.
[3.] Are you authorized to choose America's Tele-
Network as your long distance and local long distance
provider? Please say ``YES'' at the tone.
[4.] To confirm your identity, at the tone please state
your Date of Birth or your mother's maiden name.
[5.] Your Welcome package will be sent to you, which
will include any information you need.35
12. None of the 13 tapes ATNC submitted to Commission staff
included the introduction thanking the customer for selecting
ATNC and advising the consumer of the disclaimers associated with
receiving the $100 check (clause 1). Instead, 12 of the tapes
begin at the point where the voice-response unit asks for the
consumer's name and address (clause 2). Twelve of these 13 tapes
record an affirmative response to the question ``are you
authorized to select'' ATNC (clause 3). The two tapes for Ms.
Garcia and Ms. Pastrana, however, indicate consumer confusion
regarding that question. Ms. Garcia replied to the question
``are your authorized to select'' ATNC by stating in Spanish ``I
do not know what that is.'' The ATNC agent responded by stating
in English the initials ``A.T.N.,'' and then stating in Spanish:
``I believe that they translate it in Spanish `A.T.N.''' Ms.
Garcia then responded yes. There was similar confusion regarding
the purported verification of Lisette Pastrana's account.
According to the tape, ATNC spoke with Lisette Pastrana's mother,
Adelaida. In response to the question ``are you authorized to
select'' ATNC, Adelaida started to provide her name but then
changed her mind and provided her daughter's name, Lisette
Pastrana. When asked for the zip code, Adelaida stated ``Let me
see. Let me find a letter because you know. . . .'' The ATNC
agent again asked whether Adelaida was authorized to select ATNC,
and the tape contained an abrupt ``yes.'' 13. The remaining tape differs from the others in that the
tape begins with a male ATNC agent questioning the consumer, Ms.
Hovieda. In that purported verification, the agent begins the
conversation by stating ``O.K., say your name the way you want it
on the check.'' Ms. Hovieda provided her name and address, and
then the tape cuts to the automated VRU question ``are you
authorized to select'' ATNC (clause 3). No response to this
question was recorded.
14. In 1991, when the Commission first proposed the option
of using third-party verification, we published a sample
verification script.36 The script includes the following
relevant disclosures and questions to be read to the consumer:
``Hello, my name is _______ from _____, an independent
verification company. I'm calling to confirm your order for
[carrier name] long distance service.'' ``Did you . . . recently
receive a call asking you to select [carrier name] as your long
distance company?'' ``I'd like to confirm that you have selected
[carrier name] to carry long distance calls.'' ``I will now
process the order.''37 The sample script thus provides a model
of what the Commission deemed acceptable verification language:
the verifier states that she is calling to confirm an order for
``XYZ'' company's long distance service and, more importantly,
expressly asks the consumer to verify that statement.
15. When compared to this standard, ATNC's verification
script is clearly deficient. First, the statement ``thank you
for choosing America's Tele-Network as your long distance and
local provider'' merely conveys ATNC'S hope or presumption that
the consumer has authorized a change. This clause does not
directly elicit the consumer's confirmation that he actually
intends to authorize a carrier change. Second, the clause ``are
you authorized to choose America's Tele-Network as your long
distance provider'' merely elicits confirmation that ATNC is
speaking to someone with authority to request a change, not
whether the consumer authorizes a change. 38 Furthermore, the
script directs the consumer to respond ``yes'' to that question.
Finally, the script does not elicit two separate confirmations
for a change in local long distance and interstate long distance,
as required by our rules.39 In short, the verification script is
void of any ``clear and conspicuous confirmation,'' i.e., an
unambiguous, definitive, direct response from the consumer that
he or she is confirming a request that ATNC provide telephone
service. Such basic deficiencies raise serious questions as to
the legitimacy of ATNC's purportedly verified change orders.
These deficiencies are made even more serious by ATNC's apparent
failure to follow its defective script.
B. ATNC's Verification Process
16. ATNC contends that one must look at the ``net
impression'' conveyed by both the verification and telemarketing
scripts to determine whether a reasonable consumer would
understand the nature of the solicitation.40 According to
counsel, ``ATN finds it improbable that
any reasonable person would not understand the intentions of ATN
and what product they were selling,'' based on the language of
both the verification and telemarketing scripts.41
17. By invoking ``the intentions of ATN'' in defense of its
verification process, ATNC demonstrates a fundamental
misunderstanding of the purpose of the Commission's verification
rules: to provide consumers with an opportunity, separate from
the solicitation, to confirm the consumer's intent to authorize a
change in telecommunications providers. Our rules and orders are
quite explicit that authorization and verification are two
separate and distinct functions, not a continuous process as ATNC
suggests. To find otherwise would undermine the very rationale
for requiring verification, which is to curb overzealous
telemarketers from presuming a sale. Our verification rules thus
provide the consumer an additional opportunity to comprehend the
import of the oral offer and to confirm his or her request to
change carriers, if such change was intended.
18. Moreover, it is anything but clear that by
completing ATNC's verification process consumers would
understand that they have changed carriers. For example,
the agent who spoke with Ms. Hovieda indicated that he
wanted her name and address in order to send her a check,
not to establish an ATNC billing account. Ms. Hovieda duly
provided her name and address. Notably, she did not respond
to the oblique inquiry into whether she was authorized to
select ATNC. The ``net impression'' conveyed to us by Ms.
Hovieda's recorded conversation is that she expected to
receive a check, not authorize a carrier change.
19. Ms. Amber Baxter's complaint corroborates our
impression that ATNC did not make clear the nature of the call.
According to Ms. Baxter, she believed she was providing her name
and address in order to receive a refund check, not to confirm an
authorization to change carriers. The tape ATNC provided did not
contain the preamble thanking the consumer for selecting ATNC and
advising her that she had to remain on-line for 180 days before
receiving the check. We similarly note the call to Ms. Garcia
and her evident confusion regarding the meaning of the initials
``ATN'' in response to the question ``are your authorized to
choose America's Tele-Network as your long distance and local
provider.'' ATNC likewise failed to obtain authorization to
convert Lisette Pastrana's carrier. Finally, ATNC did not
provide any evidence to rebut the allegations of Ms. Ayermann,
Ms. Park, and Mr. Womack, and the evidence ATNC did provide for
the remaining complainants fails to demonstrate that ATNC
obtained clear and conspicuous confirmation that the consumers
authorized a carrier change.
IV. FORFEITURE AMOUNT
20. Section 503(b) of the Communications Act authorizes the
Commission to assess a forfeiture of up to $110,000 for each
violation of the Act or of any rule, regulation, or order issued
by the Commission under the Act.42 In exercising such authority,
we are required to take into account "the nature, circumstances,
extent, and gravity of the violation and, with respect to the
violator, the degree of culpability, any history of prior
offenses, ability to pay, and such other matters as justice may
require."43 The Commission's forfeiture guidelines currently
establish a standard forfeiture amount of $40,000 for violations
of our rules and orders regarding unauthorized changes of
preferred interexchange carriers. 44 These policies and
guidelines, however, include upward adjustment criteria that
warrant a higher forfeiture amount based on the particular facts
and circumstances of the violation(s).45 These include the
egregiousness of the misconduct, ability or inability to pay,
whether the violation was intentional, whether substantial harm
resulted from the violations, history of compliance with
Commission requirements, whether the violator realized
substantial economic gain from the misconduct, and whether the
violation is repeated or continuous.46 As provided by the
Commission's rules, the Commission and its staff retain the
discretion to issue a higher or lower forfeiture, as permitted by
statute.47
21. On several occasions, the Commission has sternly warned
carriers that it would take swift and decisive enforcement
action, including the imposition of substantial monetary
forfeitures, against any carrier found to have engaged in
slamming. 48 In the instant case, the evidence before us
indicates that ATNC has apparently willfully and repeatedly
changed consumers' preferred telecommunications service providers
without their consent. ATNC's apparent intentional failure to
verify the purported authorizations to switch the preferred
carriers of the 16 consumers identified in this NAL convinces us
that a significant forfeiture is warranted, notwithstanding ATNC'
decision to cease marketing. ATNC's verification script is, on
its face, grossly deficient in that it does not elicit a ``clear
and conspicuous'' confirmation that the consumer is authorizing a
carrier change. Nor does the script elicit separate verification
from any other authorizations obtained in the same solicitation.
ATNC could not provide proof that it had verified the disputed
changes alleged by three of the complainants, one of whom states
that ATNC slammed him twice (one incident occurring after the
date ATNC represented it had ceased its marketing operations).
As for the tapes ATNC did provide, two fail to establish that
ATNC was speaking with the subscriber (the Hovieda and Pastrana
tapes), and the remaining tapes demonstrate that ATNC's script
failed to elicit a ``clear and conspicuous'' confirmation of the
consumers' purported change requests, as required by our rules.
22. ATNC acknowledges that its ``fundamental problem and
it's [sic] failure in doing business as a telecommunications
service provider stem from a lack of obtaining quality personnel
in the three most important parts of its business: (a) customer
service; (b) marketing; and (c) MIS department.''49 We would add
to this list an apparent failure to institute procedures that
conform to Commission requirements. The gross deficiencies of
ATNC's verification process, coupled with its inability to
produce clear evidence that it properly obtained and verified the
carrier changes at issue, lead us to conclude that ATNC
apparently intentionally and egregiously violated section 64.1100
and 64.1150 of the Commission's rules and orders. We thus find
that the upward adjustment criterion related to intentional and
egregious misconduct is applicable in this case. We therefore
propose applying the base forfeiture amount of $40,000 for each
of the 17 apparent violations of section 258 of the Act and
sections 64.1100 and 64.1150 of the Commission's rules, or
$680,000, and increasing this amount by 50%, for a total proposed
forfeiture of $1,020,000. ATNC will have the opportunity to
submit further evidence and arguments in response to this NAL to
show that no forfeiture should be imposed or that some lesser
amount should be assessed.50
23. We note that ATNC has represented to the Commission
that it has ceased all telemarketing activity. If and when ATNC
resumes such activity, we direct the company to inform the
Commission in advance and to file with the Commission a
compliance plan that details actions ATNC will take and
procedures it will establish and follow to comply with the Act
and the Commission's rules and orders. The Commission will
monitor closely the level and content of consumer complaints to
determine whether the changes in ATNC's practices result in fewer
unauthorized carrier changes. Continued violations of our rules
could result in issuance of a show cause order why ATNC's
operating authority should not be revoked.51
V. CONCLUSIONS AND ORDERING CLAUSES
24. We have determined that America's Tele-Network Corp has
apparently violated section 258 of the Act and the Commission's
preferred carrier change rules and orders52 by converting the
preferred telephone service providers of 16 consumers identified
in the complaints discussed above, on the dates and in the manner
described herein. We have further determined that America's
Tele-Network Corp is apparently liable for a forfeiture in the
amount of $40,000 for each of 17 apparent violations. ATNC's
apparent intentional and repeated misconduct represents a gross
dereliction of its verification obligations; accordingly, we
propose increasing the forfeiture by 50%, resulting in a total
proposed forfeiture of $1,020,000.
25. Accordingly, IT IS ORDERED, pursuant to section 503(b)
of Communications Act of 1934, as amended, 47 U.S.C. § 503(b),
section 1.80 of the Commission's rules, 47 C.F.R. § 1.80, that
America's Tele-Network Corp IS HEREBY NOTIFIED of an Apparent
Liability for Forfeiture in the amount of $1,020,000 for willful
or repeated violations of section 258 of the Act53 and the
Commission's preferred carrier change rules and orders as
described in the paragraphs above.54
26. IT IS FURTHER ORDERED, pursuant to section 1.80 of the
Commission's rules, 47 C.F.R. § 1.80, that within thirty (30)
days of the release of this Notice, America's Tele-Network Corp.
SHALL PAY the full amount of the proposed forfeiture55 OR SHALL
FILE a response showing why the proposed forfeiture should not be
imposed or should be reduced.
27. IT IS FURTHER ORDERED, pursuant to sections
4(i) and 218 of the Communications Act of 1934, as amended,
47 U.S.C. §§ 154(i), 218, that, in the event that America's
Tele-Network Corp engages in any telemarketing activity
after the date of issuance of this Notice, it shall inform
the Commission in advance and SHALL FILE with the
Commission, within thirty (30) days of engaging in such
activity, a compliance plan detailing the actions America's
Tele-Network Corp will take and the procedures it will
establish to ensure compliance with section 258 of the Act
and the Commission's rules and orders relating to preferred
carrier changes. The compliance plan shall set forth the
revisions America's Tele-Network Corp shall make to bring
its marketing and verification scripts into compliance with
the Act and the Commission's preferred carrier change rules
and orders.
28. IT IS FURTHER ORDERED that a copy of this Notice of
Apparent Liability for Forfeiture and Order SHALL BE SENT by
certified mail to America's Tele-Network Corp. in care of Charles
H. Helein, Esq., The Helein Law Group, P.C., 8180 Greensboro
Drive, Suite 700, McLean, Virginia 22102, and to 720 Hembree
Place, Roswell, Georgia 30076, attention: John W. Little,
President.
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
Secretary APPENDIX A
COMPLAINANT LOCATION CONVERSION
DATE
1 AYERSMANN, MARYANN WEST VIRGINIA 05/27/00
BAXTER, AMBER DELAWARE 05/11/00
2
BERGER, SUSAN WASHINGTON, D.C. 07/26/00
3
BRAUCKSIEKER, LEE MISSOURI 03/16/00
4
CHASE, JUDITH RHODE ISLAND 05/27/00
5
ESPINOZA, RUBIDIO FLORIDA 03/14/00
6
GARCIA, IMELDA FLORIDA 03/14/00
7
GATTO, CAROLINE FLORIDA 03/16/00
8
HOVIEDA, FARAH FLORIDA 03/14/00
9
PADRON, ERNESTO FLORIDA 09/20/00
10
PARK, SARITA FLORIDA 04/27/00
11
PASTRANA, LISETTE FLORIDA 03/16/00
12
RUIZ, MARIA FLORIDA 05/27/00
13
VALCARCEL, JOSE FLORIDA 07/26/00
14
VALDEZ, ANA FLORIDA 03/23/00
15
WOMACK, DAVID NEW YORK 9/26/00 and 11/3/00
16
APPENDIX B
Sample Script for Third Party Verification
1991 Rulemaking, 6 FCC Rcd 1689, Appendix A
Hello, my name is ___________ from __________, an
independent verification company. I'm calling to confirm your
order for [IXC] long distance service.
Q1. I'd like to confirm your name, address and telephone
number(s). IF AVAILABLE ON SCREEN, READ BACK. Is that correct?
TAKE ANY CORRECTIONS. IF NOT ON SCREEN, ASK FOR EACH ITEM AND
RECORD.
Q1.A Did you or another person in your household recently receive
a call asking you to select [IXC] as your long distance company?
Q2. I'd to like confirm that you have decided to select [IXC] to
carry long distance calls from this (these) telephone(s). Is
that correct?
Q3. I'd like to confirm that you are an adult resident of this
household. Is that correct? IF QUESTIONED BY CUSTOMER, MAY
STATE THAT PURPOSE IS TO DETERMINE IF YOU ARE A DECISION MAKER
FOR LONG DISTANCE SERVICE FOR THE HOUSEHOLD.
Q4. I'd like to confirm that you were advised that the local
telephone company may charge a fee for switching to [IC]. Is
that correct? IF CUSTOMER ASKS HOW MUCH, VERIFIER MAY STATE
AMOUNT FROM LEC TARIFFS.
Q5. Finally, to show that I've spoken to you, please give me the
last four digits of your Social Security Number. RECORD
INFORMATION; IF CUSTOMER REFUSES, TRY DATE OF BIRTH OR MOTHER'S
MAIDEN NAME.
I will now process the order. Thank you and goodbye.
IF RESPONSE IS NEGATIVE ON ANY ITEM, INFORM CUSTOMER THAT YOU
CANNOT PROCESS THE ORDER AND THAT THE CUSTOMER MAY SPEAK DIRECTLY
WITH IXC OR MAY CALL THE LOCAL PHONE COMPANY TO ORDER THE SWITCH
IN SERVICE TO THE IXC. ANY QUESTIONS (EXCEPT THOSE IN THE Q AND
A) ABOUT THE LONG DISTANCE SERVICES OR RATES ARE TO BE REFERRED
BACK TO THE IXC.
Would you like me to return you to an IXC representative?
IF YES, THE CALL CAN GO BACK TO THE IXC REPRESENTATIVE.
_________________________
1 See 47 U.S.C. § 503(b)(4)(A). The Commission has authority
under this section of the Act to assess a forfeiture penalty
against a common carrier if the Commission determines that the
carrier has "willfully or repeatedly" failed to comply with the
provisions of the Act or with any rule, regulation, or order
issued by the Commission under the Act. For a violation to be
willful, it need not be intentional. Southern California
Broadcasting Co., 6 FCC Rcd 4387 (1991). See also Implementation
of the Subscriber Carrier Selection Changes Provisions of the
Telecommunications Act of 1996; Policies and Rules Concerning
Unauthorized Changes of Consumers Long Distance Carriers, CC
Docket No. 94-129, Second Report and Order, 14 FCC Rcd 1508, 1539
(1998)(1998 Second Report and Order).
2 47 U.S.C. § 258.
3 Letters of Inquiry from Catherine Seidel, Chief,
Telecommunications Consumers Division (TCD), Enforcement Bureau,
Federal Communications Commission, to John W. Little, c/o Charles
H. Helein, Esq., dated October 6, 2000 and October 27, 2000.
4 47 U.S.C. § 258; 47 C.F.R. §§ 64.1100, 64.1150. Sections
64.1100 and 64.1150 are now codified at section 64.1120. 65 FR
47678, 47690 (2000). Because the apparent violations occurred
prior to November 28, 2000, the effective date of the revised
rules, sections 64.1100 and 64.1150 were the applicable
Commission rules in effect during the relevant time period.
5 Letter dated December 11, 2000, from Charles H. Helein,
Esq., ATNC counsel, to Dana E. Leavitt, staff attorney,
Telecommunications Consumers Division (TCD), Enforcement Bureau,
Federal Communications Commission (December 11 Response).
6 Dun & Bradstreet report number 93-388-6905 dated January 29,
2001. According to the report, John W. Little started the
company in 1995.
7 Response dated October 20, 2000 from Craig Riegler and Kirk
Salzmann, The Helein Law Group, P.C., to Dana Leavitt, TCD
(October 20 Response).
8 Id. at 2.
9 Id. at 10. Counsel for ATNC states that Federal
Communications Group, Inc., (F.C.G.), of Bellevue, Washington,
provides verification services for ATNC.
10 October 20 Response at 10.
11 ATNC provided 13 audio tape recordings of the purported
verifications for the following complainants: Ms. Baxter, Ms.
Berger, Mr. Braucksieker, Ms. Chase, Mr. Espinoza, Ms. Garcia,
Ms. Gatto, Ms. Hovieda, Mr. Padron, Ms. Pastrana, Ms. Ruiz, Mr.
Valcarcel, and Ms. Valdez. The tapes apparently have captured
the voices of the complainants, various ATNC telemarketers, and a
pre-recorded female ``voice'' associated with the voice-response
unit.
12 Complaint dated May 11, 2000, from Amber Baxter.
13 Declaration dated February 14, 2001, from Amber Baxter.
14 Declaration dated February 5, 2001 from Jose Valcarcel.
15 Id.
16 Id.
17 Declaration dated February 26, 2001 from David Womack.
18 In response to a letter of inquiry regarding changes to Mr.
Womack's service, Verizon stated that it had processed carrier-
initiated requests to change his preferred long distance provider
on September 26, 2000, and again on November 3, 2000. See letter
dated February 14, 2001, from Marie Breslin, Director, Federal
Regulatory Affairs, Verizon, to Catherine Seidel, Chief, TCD.
19 Id.
20 See note 4, supra.
21 December 11 Response.
22 See Response dated February 12, 2001, from Kirk Salzmann,
Esq., The Helein Law Group, P.C., to Dana E. Leavitt, TCD.
23 Response dated November 9, 2000, from Craig Riegler and Kirk
Salzmann, The Helein Law Group, P.C., to Dana E. Leavitt, TCD
(November 9 Response)..
24 October 20 Response at 10.
25 Id.
26 Id.
27 47 U.S.C. § 258.
28 47 C.F.R. §§ 64.1100(a)(1)(i); 64.1100(a)(1)(ii). The
Commission adopted these rules on December 17, 1998 in the Second
Report and Order, and the rules became effective February 16,
1999 (64 FR 7759).
29 47 C.F.R. § 64.1150(d) (emphasis added).
30 47 C.F.R. § 64.1100(b) (emphasis added).
31 47 C.F.R. § 64.1100 (a)(1)(ii).
32 See Declarations filed by Amber Baxter (February 14, 2001),
Jose Valcarcel (February 5, 2001) and David Womack (February 26,
2001). See also informal complaints filed by Maryann Ayersmann
(June 27, 2000), Susan Berger (September 1, 2000), Diana Brake
(April 25, 2000), Lee Braucksieker (May 30, 2000), Judith Chase
(June 14, 2000), Rubidio Espinoza (August 21, 2000), Imdelda
Garcia (May 5, 2000), Caroline Gatto (March 27, 2000), Farah
Hovieda (May 19, 2000), Ernesto Padron (September 20, 2000),
Sarita Park (June 8, 2000), Lisette Pastrana (May 16, 2000),
Maria Ruiz (August 15, 2000), and Ana Valdez (August 23, 2000).
33 ATNC's president, John Little, drafted the verification
script with the help of F.C.G. personnel. See November 9
Response.
34 Counsel for ATNC states that ``ATN stopped marketing its
services [nationwide] on or about October 7, 2000. In large
part, this was due to the Enforcement Bureau's civil
investigative demand (``CID''). Prior, ATN had been stopping its
marketing practices in those states where it knew it had a
problem.'' December 11 Response.
35 November 9 Response, Exhibit 1.
36 See American Telephone and Telegraph Company; Petition for
Rulemaking, RM 7245, Notice of Proposed Rulemaking, 6 FCC Rcd
1689, Appendix A (1991)(1991 Rulemaking).
37 See Appendix B for a copy of the entire sample script.
38 The Commission has previously determined that asking a
consumer if he or she is ``authorized'' to request a carrier
change does not produce clear and conspicuous confirmation that
the consumer is actually authorizing a carrier change request.
See Coleman Enterprises, Inc., d/b/a Local Long Distance, Inc.,
Notice of Apparent Liability for Forfeiture, 14 FCC Rcd 13786
(1999), where the Commission found purported verification
language such as ``are you the authorized person to have Local
Long Distance provide long distance service?'' deficient. The
Commission noted that ``at no time during the `verification' is
the consumer directly asked if he or she is authorizing'' a
carrier change, as mandated by the Commission's rules. Moreover,
ATNC was aware that its own verification script was problematic
at least as early as August 18, 1998, when the Alabama Public
Service Commission (PSC) issued a show cause hearing as to why
ATNC's operating authority should not be revoked, based on 63
slamming complaints. ATNC and the PSC resolved the matter in
November 1998, when the PSC adopted a settlement order based on
ATNC's promise to, inter alia, submit all telemarketing and
verification scripts to the PSC for review. When the PSC
continued to receive an excessive number of slamming complaints
after adopting the settlement order, however, the PSC scheduled
the show cause hearing for March 7, 2000. The hearing was
triggered by ATNC's apparent failure to comply with the terms of
the settlement order, including an apparent failure to submit
verification scripts to the PSC for review. Testimony of Ray
Paul Richards adduced at the hearing reveals that ATNC's
verification asked Mr. Richards whether he was authorized to
change carriers, but ``did not ask if he was actually authorizing
the change of service to ATN.'' See Alabama Public Service
Commission v. America's Tele-Network, Corp., Docket Number 25084,
May 25, 2000.
39 47 C.F.R. § 64.1100(b).
40 November 9 Response at 13.
41 Id.
42 47 U.S.C. § 503(b)(2)(B); 47 C.F.R. § 1.80. The Commission
recently amended its rules to increase the maximum penalties to
account for inflation since the last adjustment of the penalty
rates. The new rates will apply to violations that occur after
November 13, 2000. In the Matter of Amendment of Section 1.80(b)
of the Commission's Rules and Adjustment of Forfeiture Maxima to
Reflect Inflation, Order, FCC-347 (rel. Sep. 19, 2000).
43 See 47 U.S.C. § 503(b)(2)(D); see also Forfeiture Policy
Statement, 12 FCC Rcd 17087.
44 Section 503(b)(2)(B) provides for forfeitures up to $100,000
for each violation or a maximum of $1,000,000 for each continuing
violation by common carriers or an applicant for any common
carrier license, permit, certificate or similar instrument. 47
U.S.C. § 503(b)(2)(B). The Debt Collection Improvement Act of
1996 (DCIA), Pub L. No. 104-134, § 31001, 110 Stat. 1321 (1996),
requires, however, that civil monetary penalties assessed by the
federal government be adjusted for inflation based on the formula
outlined in the DCIA. The current statutory maxima pursuant to
Section 503(b)(2)(B) are $110,000 and $1,100,000 and have
increased to $120,000 and $1,200,000 respectively, for violations
occurring after November 13, 2000. See note 44, supra.
45 See 47 U.S.C. § 503(b)(2)(D). See also The Commission's
Forfeiture Policy Statement and Amendment of Section 1.80 of the
Commission's Rules, 12 FCC Rcd 17087, 17100-01 (1997); recon
denied 15 FCC Rcd 303 (1999); 47 C.F.R. § 1.80(b)(4).
46 Id.
47 See 47 C.F.R. § 1.80(b)(4).
48 Brittan Communications International Corp., 15 FCC Rcd 4852
(2000) (Brittan Forfeiture Order); Amer-I-Net Services Corp., 15
FCC Rcd 3118 (2000) (Amer-I-Net Forfeiture Order); All American
Telephone Company, Inc., 13 FCC Rcd 15040 (1998).
49 December 11 Response. Counsel for ATNC provided a list of
``state administrative actions that ATN has been party to''
during the last two years: Mississippi Public Service Commission
(PSC); California (actions taken by both the Public Utilities
Commission and the Orange County District Attorney's office);
Indiana Utility Regulatory Commission [in a settlement reached
January 11, 2000, ATNC agreed to cease marketing in Indiana for
six months and pay $50,000 for unauthorized conversions of
consumers preferred carriers; see Docket Number 41546 SC01,
consolidated with Docket Number 41546 SC01]; State of Arkansas;
Tennessee Regulatory Authority; South Carolina Public Service
Commission; Oklahoma Corporation Commission; Iowa (actions taken
by both the Iowa Utilities Board and the Iowa Office of the
Attorney General); Florida Public Service Commission; Kentucky
Public Service Commission; and the Alabama Public Service
Commission.
50 See 47 U.S.C. § 503(b)(4)(C); 47 C.F.R. § 1.80(f)(3).
51 See CNN, Inc., et al, Order to Show Cause and Notice of
Opportunity for Hearing, 12 FCC Rcd 8547 (1997) (the ``Fletcher
Companies'').
52 47 U.S.C. § 258; 47 C.F.R. §§ 64.1100, 64.1150. See also
Second Report and Order, 14 FCC Rcd 1508 (1998) and
Implementation of the Subscriber Carrier Selection Changes
Provisions of the Telecommunications Act of 1996; Policies and
Rules Concerning Unauthorized Changes of Consumers' Long Distance
Carriers, CC Docket No. 94-129, Further Notice of Proposed
Rulemaking and Memorandum Opinion and Order on Reconsideration,
12 FCC Rcd 10674 (1997)(1997 FNPRM & Order on Reconsideration.).
53 47 U.S.C. § 258.
54 See 47 C.F.R. §§ 64.1100, 64.1150; see also 1998 Second
Report and Order; 1997 FNPRM & Order on Reconsideration.
55 The forfeiture amount should be paid by check or money order
drawn to the order of the Federal Communications Commission.
ATNC should include the reference ``NAL/Acct. No. 200132170016''
on America's Tele-Network Corp's check or money order. Such
remittance must be mailed to Forfeiture Collection Section,
Finance Branch, Federal Communications Commission, P.O. Box.
73482, Chicago, Illinois 60673-7482. Requests for full payment
under an installment plan should be sent to: Chief, Credit and
Debt Management Center, 445 12th Street, S.W., Washington, D.C.
20554. See 47 C.F.R. § 1.1914.